Nicholas Calio, president of Airlines for America, last week called for “a holistic approach” that confronts domestic aviation’s profitability and viability as an industry during a hearing of the Transportation and Infrastructure Committee convened to discuss the state of American aviation.
His plan, he said, “addresses the fundamental tax, regulatory and infrastructure challenges that prevent this industry from being sustainably profitable – and globally competitive” during a meet
Calio proposed a series of measures that would “put U.S. airline industry in a position to survive and thrive.” He said he wants a repeal of the 4.3-cent tax levied on every gallon of commercial jet fuel and for regulators to make sure additional taxes are fair and needed. Regulations that are inefficient need to be eliminated, he said, and any new rules should be “based on sound science and cost analysis.” Regulators should also help out airlines when faced with sanctions from other nations — here, Calio mentioned the European Union’s emissions trading scheme. NextGen should be given the fast track, he added, and this can be accomplished by “implementing policies and procedures to use the equipment we have today,” he said.
“This is an ambitious list with a great deal of work required on each part – and it will take time and unified engagement with Congress and the Administration to get it done,” Calio said. “A4A is committed to doing just that.”
His list of fixes came in response to a prompt from Congressman Bill Shuster, chairman of the Transportation and Infrastructure Committee, who asked for a collective vision from all stakeholders that is modeled partly on what other nations around the world have achieved with their aviation infrastructure. Shuster convened the hearing with an eye toward the next passage of the Federal Aviation Administration’s reauthorization bill.
“While I think our system is the best in the world, we have an obligation to improve it. The status quo is unacceptable — we need bold, innovative ideas,” Schuster said in his opening remarks. “The only way to improve our system is to listen.”
Susan Kurland, assistant secretary for aviation and international affairs at the Department of Transportation, said a focus needs to be put on international aviation, noting that “U.S. aviation companies see big opportunities in foreign markets.” She cited International Monetary Fund statistics that have emerging economies GDP growing at 6 percent each year, with advanced economies’ GDP only seeing an annual growth of 2 percent.
“Fully three-quarters of global purchasing power now resides outside of U.S. borders. In view of these macro trends in the global economy, the U.S. aviation industry is focusing on global markets, and we expect that to continue in the future,” she said.
Domestic airlines, she said, have added revenue by increasing their marketshare in the international arena. For the largest players, they saw international revenues soar by 86 percent over the past decade, while domestic revenue only went up by 10 percent. Low-cost carriers are also thinking about life outside the U.S. market. These explorations, she said, have brought freight exports that totaled $387.3 billion in 2008.
To ensure domestic airlines can push on toward their goal, Kurland said NextGen needs to be made a priority because the proper infrastructure has to be in place. Bilateral partnerships, which the U.S. has already secured with Brazil, China and India will also improve the international flow of goods.
“It is clear that growth in international markets has already become, and will remain, a focus of the U.S. aviation industry,” she said. “Global markets afford U.S. firms the potential for expansion and profitability, as well as offering consumers enhanced competition and increased options.”
Foreign competition also shaped remarks by Edward Wytkind, president of the Transportation Trades Department at the AFL-CIO. He told the committee that foreign states are making their policies more liberal in order to take aviation marketshare away from the U.S. and its workforce. He asked for the committee to push policies that make the U.S. competitive and rebuff those from foreign powers that are anti-competitive. To do this, he added, the U.S. needs a fully funded oversight agency.
“The ability of U.S. carriers to operate domestically and compete internationally depends on having a fully functioning and efficient FAA with stable and robust financing for our aviation system and its workforce,” he said. “We must also do more to ensure that important safety reforms are implemented and current rules are not needlessly reformed or revisited based simply on a broad anti-regulation agenda.”
A smart regulatory framework is needed, he added, to also provide a check to international growth by domestic airlines.
“What is clear is that globalization is moving fast,” he said, “and how the U.S. handles and addresses an array of issues over the next several months and years will determine if a strong and vibrant U.S. aviation industry and middle class workforce are preserved.”